Other BriefingsFiling Rules for FIEs Revised, Customs Clearance System Reformed – China Regulatory Brief
All online payments to be processed via a centralized clearing platform
The People’s Bank of China (PBOC) has released regulation which stipulates that starting June 30, 2018, all online payments made in China linked to bank accounts will be processed through a centralized online payment clearing platform.
This will allow financial regulators to protect consumers and strengthen risk control over the third party payment industry as the current system allows such institutions the possibility to misuse consumers’ settlement reserves. Settlement reserves are paid by customers to process authorized transactions before the delivery of goods is made.
The frequency of misappropriation of consumer payments have increased in the past few years with the rise of the e-commerce sector, most commonly being used as working capital invested in high risk projects or wealth management projects, causing significant losses for consumers.
The new regulation will cut out the possibility of funds misappropriation, and circumvent inefficient payment settlement processes.
Filing rules for FIEs revised
China’s Ministry of Commerce (MOFCOM) has revised its regulation for filing administration of establishment of and changes for foreign invested enterprises (FIEs).
The changes stipulate that non-FIEs converting into an FIE by means of merger and acquisition (M&A) or absorption, or strategic foreign investment into a non-FIE listed company, will no longer be subject to approval of the Commission of Commerce (COFCOM), and will only be required to undergo a simplified filing procedure, where the business scope does not fall under the Foreign Investment Negative List.
The filing procedure will also apply to the change of basic information of establishment of an FIE through M&A, introduction of new strategic foreign investor(s) by an FIE, and for change of filing information of foreign investor’s strategic investment into non-FIE listed company.
The amendments to the regulation came into force on July 30, 2017.
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Customs clearance system reformed
China’s General Customs issued a reform on the integration of the customs clearance system, which came into effect on July 1, 2017.
The reform affords enterprises the freedom to choose when and where to complete customs clearance procedures, aiming to lower cost and improve access by standardizing customs clearance regulation on a national level.
This will be achieved by transforming the process from an approval model to an acceptance model, i.e. supervision after release, which will make for a more efficient system with minimal interference.
Multiple layers will be added to the clearance system, including a first layer to manage risk prevention analysis, and then another to assess tax risks and liability of goods before clearance. Risk prevention center branches will be established in Shanghai and Qingdao, while tax collection and administration centers will be established in Shanghai, Guangzhou, Beijing and Tianjin.
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